Guest posting: game theory and Iran

Hello again to missmarketcrash's readers. I have the privilege once again of making the occasional contribution while she's on holiday.

Today, in honour of missmarketcrash's Rhode Island resort, I was very interested to read this article from her near-neighbour the New York Times.

My own work is about using behavioural economics to understand, predict and perhaps influence some aspects of decision making.

So it was fascinating to learn about Bruce Bueno de Mesquita (must remember not to compress this to 'Bruno' which is what I nearly typed) who does something similar but based fully on rational actor theory. He uses game theory techniques and a software system to project how power plays and coalition building will result in political or business outcomes.

Now lots of people are sceptical about the effectiveness of this kind of prediction. It's clear that the results are highly dependent on the input parameters - in the Iranian example, he suggests that Ahmedinejad's "desire" is 90, "power" is 5 and "resolve" is 90. To be honest this sounds like nothing quite so much as the strength, stamina, intelligence and charisma scores in Dungeons and Dragons, but you do have to start with some numbers if you're going to build any kind of model.

The article may be oversimplifying his approach, but these figures seem just to be assumptions not based on any empirical measurements. The proof, in any case, will be in the pudding, but it's a little slippery to get hold of any testable predictions because lots of it is covered by commercial confidentiality - or worse, national security. However:

...a study by the C.I.A., now declassified, found that Bueno de Mesquita’s predictions "hit the bull's-eye" twice as often as its own analysts did.

Anyway my interest is piqued because, despite the suggestion that this is based on a rational agent model, it appears to use some very psychological variables which aren't incorporated into standard game theory: preferred outcome, desire and resolve. I suspect that behavioural game theory might be a better description of this.

I will be following Mr Bueno de Mesquita's work with interest - we will have an interim result by October as he has predicted a student uprising in Iran.

The ethics of open source...

Missmc has been seriously derailed by this flu-like illness.  The saving grace is Missmc's little netbook arrived in the mail today.  Cute cute cute and light as a feather.  I have been sent into the world of Linux and Ubuntu and it does look like a nice place to get lost.  I suspect that the wandering geeky part of my brain will be in residence on this website for the next few weeks.

Part of the open source philosophy is that I might be a useful member of the community.  I am all for using free software, but, part of that bargain is giving back to the community by tweaking the programs.  Alas, Missmc does not code.  I feel an ethical dilemma sitting on my shoulder. I feel like a parasite.  Speaking of parasites, there have been a slew of articles outlining how parasites can modify the behavior of the host.  A fascinating study revealed a correlation between traffic accidents and infection with Toxoplasma.  This link was cited by Alex on MR last week.

Missmc has always toyed with a "there is something in the soil" theory about unrest in the Middle East.  Studies like this make me want to run out and collect some samples for analysis in regions that have a long history of turmoil.  Something in the local soil that gets in humans and makes people fight fight fight.  Anyone want to hire me to overlook a study?  I thought not.

Back to Ubuntu.  Will I, as a parasite, modify my host's behavior?  Possibly.  I can tell them about bugs, and, I've seen a few already.  That is only useful after I make sure they are issues not already known.  And I don't have time for that.  So...where can I send some flowers?

The road not taken...

After a full day with my children and a peek at the news, the theme of the day appears to be behavior prediction and its associated theories and models.  Whether mathematical, scientific, sociologic or with some other base, the methodology of behavior prediction is only questioned when one disagrees and has enough knowledge of the topic to dissent.

Generally, that leaves The-Man-In-The-Street with an article in the newspaper or a magazine which he reads as The Truth as it was ascertained by some important sounding technique, be it an analysis of market performance by assessing the long tails and short noses of a PanGaussian analysis, or, Gina Ford's monotone approach to understimulated child-rearing.  In short, we are assured by the opinions of experts.

So, when there is an Issue where one would like to predict or influence an outcome, whether it the markets, world economies, Gaza, my children -- most would rush to well-worn models, theories and and experts - rushing the past through the brains of todays experts. America is very very good at doing that --  "The Past" is a more important concept to a young nation and so it is held in high esteem.  More astute critical thinkers sit around doing the same, but, challenging the foundations of these theories, methodologies and, well, perhaps coming up with something new. And that innovation will more than likely dissent from the norm.

The situations currently under the worlds ponderances are very much off the norm.  Things may look familiar, but, that is the mistake - seeing markets, world economies, Gaza, anything really -  through the lense of the familiar puts a bit of a blinder on perceptions.  And so, to follow, look closely.  What is happening now with regard to economics and everything that swirls around that is a completely new situation that we have never experienced before.

So, drawing those two points together - looking closely, and, challenging the foundations-of-things-that-are-used-to-explain-things is not a terribly mind-shattering thing to say, but to listen and think off the norm might well be the helpful way - and as to behavior prediction with regard to humans, this kind of thinking requires bravery and is generally the road not taken.